Answer to Question #199101 in Macroeconomics for Joseph

Question

In 2012/13 Cyprus was hit by banking crisis. Jeroen Dijsselbloem, the former head of the

Eurogroup, remarked in this context: „From now on the [bank] creditors will be held

financially responsible in resolution funding. Public sector financial aid will be the

exception.“

a) Judged against the competencies of the Eurogroup, was Jeroen Dijsselbloem

in a position to make this statement?

b) Explain what he meant.

c) He was heavily criticised for the statement, amongst others by

representatives of the European Central Bank. What are possible reasons for

the criticism?

d) Judged retrospectively against the evolution of EU bank regulation (“Banking

Union”), was he more right or more wrong?

Answer 1

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